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Annual Outlook Survey Offers a Glimpse of Brick-and-Mortar Resilience
NORTH PLAINFIELD, N.J., March 22, 2021 – In February 2020, Levin Management Corporation’s (LMC’s)annual Outlook Survey of retailers within its 110-property, 15.5 million-square-foot leased and managed portfolio drew some of the most positive sentiment in the poll’s decade-long history. Just one month later the global pandemic took hold in the United States – changing the course of the industry swiftly and profoundly.
LMC, once again, recently surveyed its tenants. The results reflect the challenges brick-and-mortar space users – particularly the hard-hit retail, restaurant and entertainment categories – have faced over the past 12 months. Yet it also reveals the resilience of a sector that is no stranger to change.
Regarding 2020 performance, it comes as no surprise that sales were down last year for a majority of LMC survey respondents. However, more than one third (34.3%) reported their annual sales met or exceeded 2019 levels. Further, more than two thirds (66.9%) of respondents expressed optimism for store performance in 2021. This compares to a trailing nine-year average of 68.1% expressing optimism for the coming year.
“We view the percentage of our tenants that held their own or even grew their sales last year – during an incredibly difficult period – as significant,” noted LMC’s Matthew K. Harding, chief executive officer. “The positivity expressed for the near term is also encouraging. It mirrors the steady optimism we have seen through the history of our survey, which spans a variety of economic climates and transformational changes for retail.” This outlook is supported by forecasts from organizations like the National Retail Federation, which anticipates retail sales growth between 6.5% and 8.2% this year.
LMC survey participants were asked what top three drivers they feel will have the biggest impact on their business in 2021. Of the presented options, the most popular included COVID-19 vaccine rollouts (selected by 68.8%), the further lifting of COVID-19 related restrictions (selected by 63.9%), the economy/consumer confidence (selected by 54.9%), and shifting consumer expectations and shopping patterns (selected by 36.1%).
“We have been asking a similar question for the last few years, although we expanded the list of drivers for 2021, logically, to address COVID-19,” Harding noted. “The responses here make sense. While we all hope – and even anticipate – that 2021 will bring a return to normalcy, we are not there quite yet. As more people are vaccinated, restrictions continue to lift and the economy regains solid footing, the retail industry will enjoy renewed velocity.”
LMC survey participants reported their adoption of a variety of pandemic-fueled adaptations in 2020. Nearly two thirds (61.4%) added fulfillment options such as online ordering for store or curbside pick-up, shipping or delivery service. Nearly one third (32.9%) incorporated shopping reservations/appointment times, and 30.0% created a designated area for click-and-collect orders (in-store or curbside). Other modifications included open-air setups for dining, classes or other activities; limiting numbers of shoppers in-store; and stepped-up cleaning protocols, health screenings and other safety measures.
Notably, more than half (52.7%) said they will maintain some or all of their pandemic-fueled adaptations as permanent operational best practices. Flexible fulfillment options topped the list of changes that will carry through to the future – an LMC takeaway reflected in other research, including Deloitte’s 2021 retail industry analysis.
“We witnessed first-hand how retailers worked to reopen or stay open during the pandemic,” Harding said. “They exercised creativity, and focused on providing safety and convenience for their customers. That last point – customer convenience – has true staying power. Even before COVID-19, fulfillment agility had taken its place in the spotlight. For several years, major retailers have been adopting omnichannel fulfillment, with click-and-collect driving customers to brick-and-mortar stores. Now that practice has become nearly universal – across categories and among retailers large, small and in-between.”
To that end, Harding noted that the retailers best positioned to succeed moving forward will remain focused on catering to the habits, wants and needs of consumers. And they will continue to embrace today’s digital environment. Beyond enabling new avenues for fulfilment, technology has become a powerful marketing tool for LMC survey respondents. When asked to compare their amount of 2021 planned technology-centered marketing – such as email, text messaging, SEO optimization, Google AdWords, banner ads or other Internet advertising, and social media/social marketing – to last year, 86.1% indicated they will spend as much or more.
“This commitment reflects the vital role of digital platforms in reaching consumers,” Harding said. “Our annual Mid-year Retail Sentiment Survey – which we suspended in 2020 but look forward to conducting again this June – typically focuses on technology issues, and this is one of our repeat questions. Ultimately, our data shows sustained trending in brick-and-mortar retailers leveraging tech platforms to differentiate themselves and compete in a digital world.”
LMC’s surveys, conducted three times annually, also include an October/November poll gauging expectations and plans for the holiday season. For nearly seven decades, the company has served as a trusted single-source commercial real estate services provider for institutional and private owners. LMC today maintains a diversified, retail-focused portfolio in the Northeast and Mid-Atlantic states. The firm’s capabilities continue to evolve with new technologies, efficiencies and sustainability-focused initiatives to serve a new generation of properties, investors and tenants.